The Bank sponsors a 401(k) plan. The 401(k) plan covers substantially all employees and provides for an employer matching contribution based on a percentage of salary contributed to the plan. The Bank contributed approximately $210,000 and $201,000 to the 401(k) plan during 2021 and 2020, respectively.

During 2019, the Bank entered into supplemental executive retirement agreements (each, a “SERP”) with certain of its officers whereby a specified monthly benefit is payable upon a normal retirement for a period of 10 years. Each SERP is a nonqualified deferred compensation arrangement that conditions payment of the full normal retirement benefit upon an officer’s attaining normal retirement age while in the service of the Bank. Otherwise, the retirement benefit is earned over time and, with the exception of the SERPs for a former and a current executive officer, is subject to a ten-year vesting schedule. Moreover, the amount and timing of payment of the retirement benefit may vary depending upon the circumstances of an officer’s earlier termination of employment, including death, disability, or in connection with a change in control. The retirement benefit is forfeited in the event of a termination of employment for cause or if grounds exist for such a termination. The expense associated with the SERPs is offset by earnings on life insurance policies owned by the Bank. The cash surrender value on these insurance policies was approximately $11,167,000 and $10,883,000 as of December 31, 2021 and 2020, respectively. Additionally, at December 31, 2021 and 2020, the Bank has recorded a liability for the present value of the future retirement benefits of approximately $641,000 and $491,000, respectively, to be paid under

the SERPs. Expense for the SERPs was approximately $150,000 and $288,000 for the years ended December 31, 2021 and 2020, respectively. In determining the SERPs obligation for 2021 and 2020, the discount rate used was 2.17% and 2.18%, respectively.

The Bank has maintained a discretionary practice of paying a retirement benefit to eligible non-employee directors who attain at least age 70 in the service of the Bank with at least 15 years of service to their credit. Under this practice, each eligible retired director received a monthly benefit in the amount of $825. In anticipation of the Reorganization (see Note 13), the Bank decided to formalize and revise this practice in 2020. The Bank has relinquished its discretion over the practice with respect to eligible retired directors and current non-employee directors who satisfied the eligibility criteria for the benefit as of December 31, 2019. The normal retirement benefit for this group will be a monthly benefit in the amount of $825 a month for the remaining life of the director. With respect to all other non-employee directors serving as of December 31, 2019, the amount of the normal monthly benefit will remain unchanged, but will be paid over a period of 10 years following retirement or, if less, the director’s remaining lifetime. The eligibility criteria for this group has been changed to the attainment of at least age 65 with at least 10 years of service. No future non-employee director will be eligible for a benefit under this formalized plan. The Bank has recorded and will continue to record a liability for these payments as post-retirement defined benefit obligations. The Bank recognized current year expense of $47,000 and $46,000 during the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, the Bank had a projected defined benefit obligation of approximately $498,000 and $610,000, respectively, assuming the continuation of its then existing practice. The discount rate used in determining the accumulated post-retirement defined benefit obligation was 2.17% in 2021 and 2.18% in 2020.

The Bank also sponsors a tax-qualified defined benefit retirement plan. Effective March 31, 2019, eligibility for the plan was frozen so that no employee who was not then a participant in the plan could later become a participant and to freeze benefit accruals for all existing participants. For existing participants, the plan provides for retirement payments based on a formula using a participant’s years of creditable service and highest three years of annual compensation. Retirees age 66 and older are also eligible for an annual supplemental payment equal to one percent of their monthly benefit multiplied by the number of their retirement years beyond age 65. Participants who entered the plan prior to July 1, 1983 are also eligible for a one-time lump sum payment upon retirement after reaching age 55 equal to three times their monthly retirement benefit. A participant is also required to vest in any benefit earned under the plan formula by completing a minimum number of years of vesting service. The plan also provides for disability benefits and surviving spouse benefits in circumstances where the normal retirement benefit would not otherwise be payable.

The following is a summary of the components of the net periodic post-retirement benefit cost during 2021 and 2020:


	2021			2020
Interest cost	$	300,973		$	366,543
Expected return on assets		(710,539	)		(643,058	)
Amortization of unrecognized loss		219,288			142,053
Periodic post-retirement cost (benefit)	$	(190,278	)	$	(134,462	)

The discount rate used in determining the accumulated post-retirement benefit obligation was 2.33% and 3.09% in 2021 and 2020, respectively. The expected long-term rate of return on assets was 8.00% during both 2020 and 2021. The assumed rates of salary increase used in measuring the accumulated post-retirement benefit obligation ranged from 5.35% to 10.10% during 2021 and 2020.

The Bank expects to make contributions to the plan in 2022 totaling $0. The following table presents the estimated benefit payments for each of the next five years and in the aggregate for the five years thereafter as of December 31, 2021:


2022		585,550
2023		586,872
2024		590,481
2025		591,945
2026		590,784
2027-2031		2,846,764
	$	5,792,396

The following is a reconciliation of the accumulated post-retirement benefit obligation as of December 31, 2021 and 2020:


	2021			2020
Projected benefit obligation at beginning of year	$	13,209,019		$	12,155,436
Interest cost		300,973			366,543
Actuarial gain		(766,993	)		1,261,873
Benefits paid		(583,244	)		(574,833	)
Projected benefit obligation at end of year	$	12,159,755		$	13,209,019

The following is a summary of the change in plan assets during 2021 and 2020:


	2021			2020
Fair value of plan assets at beginning of year	$	9,168,583		$	8,257,698
Actual return on assets		1,068,427			1,062,482
Employer contributions		—			485,934
Administrative expenses		(65,873	)		(62,698	)
Benefits paid, net		(583,244	)		(574,833	)
Fair value of plan assets at end of year	$	9,587,893		$	9,168,583

The fair values of the Bank’s pension plan assets at December 31, 2021 and 2020, by asset category, are as follows:


			Fair Value Measurements
	Assets Measured at Fair Value		Level 1		Level 2		Level 3
December 31, 2021:
Cash and cash equivalents	$	14,881	$	14,881	$	—	$	—
Debt securities mutual funds		3,059,854		3,059,854		—		—
Equity securities mutual funds		6,513,158		6,513,158		—		—
	$	9,587,893	$	9,587,893	$	—	$	—
December 31, 2020:
Cash and cash equivalents	$	23,438	$	23,438	$	—	$	—
Debt securities mutual funds		2,751,130		2,751,130		—		—
Equity securities mutual funds		6,394,015		6,394,015		—		—
	$	9,168,583	$	9,168,583	$	—	$	—

The fair value of all pension assets are determined from quoted market prices and are considered Level 1 fair value measurements.

The plan’s investment policy includes various guidelines and procedures designed to ensure assets are invested in a manner necessary to meet expected future benefits earned by participants. The investment guidelines consider a broad range of economic conditions. Central to the policy are target allocation ranges by major asset categories. The objectives of the target allocations are to maintain investment portfolios that diversify risk through prudent asset allocation parameters, achieve asset returns that meet or exceed the plan’s actuarial assumptions and achieve asset returns that are competitive with like institutions employing similar investment strategies.

The following is a summary of the amount recognized in other liabilities as of December 31, 2021 and 2020:


	2021			2020
Projected benefit obligation at end of year	$	12,159,755		$	13,209,019
Fair value of plan assets at end of year		(9,587,893	)		(9,168,583	)
	$	2,571,862		$	4,040,436

Amounts recognized in the accumulated post-retirement benefit obligation and other comprehensive income (loss) for the years ended December 31, 2021 and 2020 were:


	2021			2020
Net loss	$	(1,059,008	)	$	905,147
Amortization of net unrecognized gain		(219,288	)		(142,053	)
Total accumulated other comprehensive loss	$	(1,278,296	)	$	763,094

As part of the stock offering, the Company established the TC Federal Bank Employee Stock Ownership Plan ("ESOP") to provide eligible employees of the Company the opportunity to own Company stock. The ESOP is a tax-qualified retirement plan for the benefit of Company employees. Contributions are allocated to eligible participants on the basis of compensation, subject to federal limits. The Company uses the principal and interest method to determine the release of shares amounts. The number of shares committed to be released per year through 2040 is approximately 19,600.

The ESOP funded its purchase of 391,868 shares through a loan from the Company equal to 100% of the aggregate purchase price of the common stock. The ESOP trustee will repay the loan principally through the Bank's contributions to the ESOP over the remaining loan term of 19 years. At December 31, 2021, the remaining principal balance on the ESOP debt was $3.7 million.

Under applicable accounting requirements, the Company records compensation expense for the ESOP equal to the fair market value of shares when they are committed to be released from the suspense account to participants' accounts under the plan. Total compensation expense recognized in connection with the ESOP for the year ended December 31, 2021 was approximately $335,000.